The Division’s revamped merger review process aims to resolve most investigations within six months from the date of an HSR filing. To do this, the Division plans to expedite its initial investigations by having early Division Front Office engagement with the parties and by posting a model voluntary request so parties can quickly submit the information critical to the Division’s initial investigation. For those few mergers that warrant a full, “Second Request” investigation (approximately 3 percent), the Division will significantly reduce the amount of information it collects from the parties and shorten the time its needs to make a decision. These modifications should save merging parties in a Second Request investigation significant time, money, and resources. It may, however, come at the expense of relevant third parties because the Division plans to require them to produce more information than they have historically provided on a shorter time frame. The Division also expects the parties to make faster and earlier productions, but this presumably will be easier for the parties given the fewer number of custodians.
Below are highlights of the Division’s specific modifications:
- Welcome Early Front Office Meetings. The parties will have the opportunity for an initial in-person meeting with the Division’s Front Office to advocate for early merger clearance. In the past, the Division’s Front Office would only meet with the parties near the end of a full investigation.
- Model Voluntary Requests. During the initial review period, the Division typically asks the parties to voluntarily produce information critical to its investigation that is not included in the HSR filing. This information includes the parties’ strategic plans, win/loss data, customer contact information, and market analyses. The Division will now post a model voluntary request letter to give parties a head start to identify the types of information the Division will need for its investigation.
- Model Timing Agreement. If the Division issues a Second Request, it has 30 days to review the transaction from the date the parties certify substantial compliance with the Request. Typically, the Division will negotiate an extension of this review period in exchange for concessions on the number of custodians and/or depositions. The negotiation process can take a considerable amount of time and resources so the Division will have a model timing agreement to speed up this process.
- Fewer Custodians and Depositions. The Division will limit the number of custodians to 20 per party absent Front Office approval. It also will not seek more than 12 total depositions unless the Front Office authorizes more. In the last few years, the agencies have routinely required 30-plus custodians per party and taken more than 20 depositions.
- Shorten Agency Review Time Period. The Division will now conclude its review within 60 days from the date of substantial compliance with a Second Request. Before, the Division took as much time as it need—sometimes more than 120 days—by threatening to file a lawsuit if the parties did not agree to extend the review period beyond the statutory period or the period in the negotiated timing agreement.
- Third-Party CID Enforcement. The Division plans to hold third-party recipients of subpoenas (“CIDs”) in merger investigation to the deadline and specifications in the CID. It will not hesitate to bring CID enforcement actions to ensure compliance. In the past, third-parties could avoid or delay responding to CIDs by stringing the Division staff along with promises of information and small incremental productions.
All in all, these changes to the Division’s review process appear good for parties to a merger, while not so good for third parties. It is important that the antitrust agencies only delay mergers for the minimum time period necessary to investigate a possible antitrust violation and only collect information that their investigation requires. While these changes appear to be a step in the right direction, we will need to see how the Division staff responsible for investigating mergers applies them to their investigations. Notably, it will not be helpful if the Division intends to shift information burdens away from the parties to third parties who have little incentive to comply with overly burdensome subpoenas. Instead, the Division should use these changes to reduce the amount of information it collects from all parties, not just the merging parties. It also will be equally important to have the FTC—who also investigates mergers—to follow the same protocol as the Division in its investigations, otherwise merging parties will face very different clearance hurdles depending on which federal antitrust agency reviews their transaction.